April 7, 2009

A Tea Party Icebreaker: What Are You Getting for Your $6,000 in New Debt?

Carroll Andrew Morse

According to numbers put out by the Congressional Budget Office…

  1. President Obama's economic stimulus package will increase the debt burden on American taxpayers by over $6,100 per household ($719 billion in debt, divided by about 117 million households) by 2011.
  2. The total package of spending and revenue changes enacted by Congress between January and March of this year will increase the debt burden on American taxpayers by over $6,700 per household by 2011.
This might make for a good ice-breaker with the other tax-units, er I mean people, at next Wednesday's Rhode Island tea-party: What returns are you seeing on the $6,000 - $7,000 surge in debt that the government will be running up in your name over this year and the next two?

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I still say this begs the question: where have you folks been? Bush added $4 trillion to the debt. Now you guys fall all over yourselves about $719 billion?

Don't get me wrong. I think it's fair to question government spending, but some seem to only object to spending when done by Democrats.

Posted by: Russ at April 7, 2009 2:56 PM


You’re comparing two numbers that aren’t quite the same. The CBO figures in the sources I’ve been citing don’t include the intragovermental debt, while the CBS figures do (I’d not realized that there were two different sets of figures commonly reported on this subject).

Here’s the history, in a common set of numbers available from the recent CBO reports: In the year 2000, the "debt held by the public" was $3.4 trillion. In 2008, the figure was $5.8 trillion, an increase in debt of $2.4 trillion over the Bush administration.

That’s a big increase. No argument here. However...

1. A large part of that increase is fueled by automatic entitlement growth. We can have a rip-roaring argument about whether not getting entitlement spending under control is Bush’s fault or not, but if not controlling automatic entitlement growth counts for Bush, then it counts for his successors.

2. Those eight years aren’t the whole story of the Bush administration. The CBO also estimates that, if left on autopilot following the Bush round of bailouts, the debt held by the public would be $11.0 trillion by 2016, an increase of $5.2 trillion. Again, in addition to the bailout money, there’s a large growth in entitlements included in that figure.

The Obama increase is on top of that. Based on the budget that the President has submitted, the national debt is projected to be $14.5 trillion by 2016, a $3.5 trillion increase above the automatic growth in entitlements, if no new programs are added to the Federal government between now and 2016.

And that’s where we are in the 3rd month of the Obama administration.

Posted by: Andrew at April 7, 2009 7:07 PM

"What returns are you seeing on the $6,000 - $7,000 surge in debt that the government will be running up in your name over this year and the next two?"

... um ...

Lessee ...

There's ..... nope.

Okay, April 15. This is good. We have eight days to think of an answer.

Posted by: Monique at April 7, 2009 7:11 PM

How about accounting for the Bush administration's "gimmicks" such as excluding war costs or playing games with the alternative minimum tax projections?

The White House budget office calculates that over the next decade, the tax would add $1.2 trillion in revenues. But Mr. Obama is not counting those revenues, and he is adding $218 billion to the 10-year deficit projections to reflect the added interest the government would pay for its extra debt.

As for war costs, Mr. Bush included little or none in his annual military budgets, instead routinely asking Congress for supplemental appropriations during the year. Mr. Obama will include cost projections for every year through the 2019 fiscal year to cover “overseas military contingencies” — nearly $500 billion over 10 years.

That's $718 billion simply due to accounting changes, no?

Posted by: Russ at April 8, 2009 12:56 PM


CBO numbers include AMT and Iraq estimates. The Obama administration hasn’t yet moved the Iraq supplementals into the regular DoD budget (see page 14 of the initial estimate of the President’s budget) but the CBO still makes estimates of how much they will cost. I think the points you made above would be salient if we were discussing OMB numbers.

But not to miss the forest for the trees, are you saying you don’t believe that President Obama’s spending program, as announced so far, is going to explode the national debt?

Posted by: Andrew at April 8, 2009 7:19 PM

Yeah, spoke too soon on that one...

Well, not only is overall military spending on the rise, but Obama is about to ask for billions more for the wars in Iraq and Afghanistan in a “supplemental” spending bill, the type which were staples in Bush’s campaign to mask of the full military budget and total cost of the wars. Obama could seek the funding as early as Thursday.

And, yes, I think the debt will go up. I'm more in the Krugman camp that thinks the debt is of secondary concern to the the economy at the moment, which is why I'm critical of plans to bailout zombie banks but not of funding infrastructure projects, which I'd be happy to see much more of.

I'm also with folks like Rep. Frank who have criticized the administration's increase in military spending when what we need are cuts "to accomplish his goals of expanding health care and other important quality of life services without ballooning the deficit."

What's curious for me is that much of anger on the right seems to be generalized against deficits what-so-ever, which seems odd given that only a few raised concerns during the massive deficit run ups of the Bush administration.

Posted by: Russ at April 9, 2009 3:41 PM

Recommended reading... The Big Takeover: How Wall Street Insiders are Using the Bailout to Stage a Revolution.

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve - "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron - a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

What gets me is that as near as I can tell, many on the right seem to think the current problems can be pinned on ACORN and a handful of poor folks who bought more house than they could afford. It really strains belief when you consider that since 2000 credit default swaps grew from $900 billion to $45.5 trillion, "roughly twice the size of the entire United States stock market" and totally unregulated. As Taibbi says in the Rolling Stone article, no one forced firms like AIG to make "world-sinking $500 billion bets with money it didn't have" on that market.

Posted by: Russ at April 10, 2009 2:25 PM
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